Everything you need to know about the 2017 Annual Tax Return

Tips for filing your Annual Tax Return
April 4 marked the beginning of the 2017 Annual Tax Return campaign, with some important updates since the previous year. In this article we will pick out some of the highlights, such as the tax treatment for different financial products.
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Key dates of the 2017 annual tax return campaign

Since April 4, taxpayers have been able to request their draft annual tax returns and file them, provided this is done online (through the Renta Web website, which replaced the PADRE program) or over the phone. From May 8, taxpayers can request an appointment to speak with an adviser from the Spanish Tax Agency at one of its branches. From May 10, annual tax returns can be filed in person at branches of the Spanish Tax Agency, partner entities, or autonomous community region authorities.

The 2017 Annual Tax Return campaign will conclude on July 2, although for taxpayers whose tax returns require them to make a payment and who opt to do so by direct debit, the deadline is June 27.

Updates for this year

One of the major updates this year is the new app for filing tax returns, available for Android and iOS mobile devices. Through this app, taxpayers can request their tax details or reference number in order to generate their tax return, as well as file it.

A new ‘We'll call you’ system is also added to the list of services which the Tax Agency offers taxpayers. Taxpayers can use this tool to request an appointment (by calling 901 12 12 24 or 91 553 00 71) so that the Administration calls the user, and they can prepare and file their tax return over the phone.

In addition, a new appendix has been added to the tax return form. This appendix encompasses all the relevant information for future financial years and will serve as a point of reference for subsequent annual tax returns.

It is worth remembering that in the 2016 campaign, more than 19.7 million tax returns were filed, of which some 14 million resulted in a refund to the taxpayer. Taxpayers who found themselves in this situation received a total of 9,996 million euros. There were 4.86 million taxpayers whose tax returns resulted in an amount payable to the Tax Agency, totaling 9,173 million euros.

Tax treatment of financial products

Financial products give rise to two types of taxable incomes: capital gains or losses (primarily from the transfer of shares and investment funds) and yields from movable capital (e.g., bank accounts, deposits, life insurance products, treasury bills and bonds, etc.). In both cases, the tax rates varies between 19% and 23%, and the income or losses are included in the savings tax base of the annual tax return.

One update for the 2017 annual tax return campaign is that the disposal of preferential subscription rights will give rise to a capital gain, which is subject to tax withholding.

Measures that allow taxpayers to reduce their tax liability

There are still certain deductions that taxpayers can access to reduce their tax burden on their annual tax return. These include the deduction available to taxpayers who have invested in their primary residence, if they bought their home before January 1, 2013, up to a maximum of 9,040 euros per taxpayer.

Another measure is investing in investment funds. Taxpayers can carry out transfers between investment funds without paying taxes until they definitively withdraw their money, provided that a series of requirements are met (including the need to immediately reinvest the money obtained from the reimbursement of the first fund in the subscription of the second fund, without drawing down on that money at any time).

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Taxpayers can also access a deduction by contributing to pension plans, up to a limit of 8,000 euros per year or 30% of the sum of the taxpayer's employment and business activity income, whichever is lower. In exceptional circumstances, such as contributions made on behalf of a spouse who has an income below 8,000 euros, or on behalf of a beneficiary with a disability, the tax deduction can be greater.
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